corporate finance

chandniwadhwani92
Finance Junkie
Posts: 166
Joined: Mon Oct 06, 2014 7:36 am

corporate finance

Postby chandniwadhwani92 » Thu Nov 27, 2014 8:51 am

in schweser it is given when company pays stock dividend from reserves it will decrease reserves and increase share capital.
How share capital will increases as we know shareholders do not provide capital when they get stock dividend as this would get them in place of cash as dividend.

PLEASE EXPLAIN THIS CONCEPT

edupristine
Finance Junkie
Posts: 722
Joined: Wed Apr 09, 2014 6:28 am

corporate finance

Postby edupristine » Thu Dec 04, 2014 7:45 am

When company announce stock dividend reserve decreases and share capital increases by the amount of extra shares issued. Hence (Equity = reserve + share capital) equity will remain same.


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